Harper heads to Seoul as critics warn South Korea free-trade deal could flood Canadian market with foreign cars

Prime Minister Stephen Harper departed Sunday for South Korea, where he is widely expected to complete another long round of free-trade negotiations that his critics were denouncing as secretive and potentially bad for Canadian workers.

It wasn’t known whether Harper planned to sign the final text of a free-trade deal with South Korea — a laborious, decade-long, on-again, off-again process — or was simply going to announce an agreement-in-principle in a staged photo-op.

That’s essentially what occurred last fall when Harper jetted off to Brussels on short notice to mark the end of four years of rocky negotiations with the European Union.

The fanfare of that announcement was not accompanied by a final text, something Harper and the Europeans said at the time could take at least another year and a half. However, Trade Minister Ed Fast said last month the legal text should be ready soon, possibly in the next month or two.

Are they going to go just to shake hands?

A government source close to the talks, who was not authorized to speak on the record, noted that Harper tabled a summary of “final negotiated outcomes” in the House of Commons within two weeks of the Brussels signing ceremony.

NDP trade critic Don Davies said growing trade with South Korea and Asia in general is a good thing. But he was skeptical that the week’s coming ceremonies would not amount to much more than a repeat of Brussels.

“Are they going to go just to shake hands, have a photo-op and sign an agreement-in-principle without the actual details or text to be released?”

Davies assailed the government for a total lack of transparency, and questioned whether the deal would be able to protect jobs in Canada’s auto sector.

“In trade deals, it’s details that matter,” he said.

“The Conservatives have the least transparent trade policy probably in the developed world. They are closed, they are secretive and they don’t involve a lot of stakeholders; they don’t involve the opposition.”

The deal would mark progress toward expanding trade with Asia, a major economic priority of the Harper government. Coming on the heels of the Canada-EU pact, it would allow Harper to trumpet his first significant free-trade deal in Asia, and give impetus to other negotiations, particularly with Japan.

“It’s a very long time coming,” said Yuen Pau Woo, president of the Asia Pacific Foundation of Canada.

“We are well behind our competitors, and closing with Korea will show that Canada is serious about developing stronger trade ties with Asia, and could well accelerate the pace of our negotiations with other countries.”

International Trade Minister Ed Fast acknowledged as much in an interview aired Sunday.

“Our exports to Korea have declined quite precipitously since the Americans and the Europeans got their trade agreements with Korea,” Fast told CTV’s question period.

“So we’re looking to level the playing field, make sure that our businesses can compete fairly with some of our biggest competitors.”

A key irritant is the auto sector. Canada has a 6.1% tariff on car imports.

Critics fear that if it is removed, the Canadian market would be flooded with Korean-made brands such as Hyundai and Kia.

The government source said the tariff elimination “will have a very limited impact on Canadian production and jobs.” The source noted 2012 research prepared for the Trade Department that said 85% of autos manufactured in Canada are for export.

“The protective effect of Canada’s 6.1% tariff on auto imports from Korea is diminishing dramatically,” the source added, noting that half the Korean-made cars sold in Canada this year will enter the country tariff free from the United States under the North American Free Trade Agreement.

Woo said the government would likely compensate the auto sector in the short term.

“The U.S. has a free-trade agreement with Korea. It has a much larger auto sector than we do. They are the same companies,” he said.

“This is a deal that can be done in Canada, notwithstanding the challenges.”

Ontario’s economic development minister, Eric Hoskins, has said Korea out-exports Canada 50 to one in autos and he hasn’t been assured by Ottawa that Canada’s automakers won’t be even more disadvantaged once tariffs are removed.

Fast dismissed concerns from the likes of the Ford Motor Company that a deal with Korea that removes auto import tariffs would devastate Canada’s auto industry.

“We have had broad consultations with the auto industry, and we believe the outcome that we’re hoping to achieve will be a balanced one,” he said.

“It will reflect many of the concerns raised by the auto industry.”

“This deal is likely to further cement Canada’s global role as a natural resource supplier, to the detriment of higher value-added sectors, such as the auto industry,” said Scott Sinclair, senior research fellow with the Canadian Centre for Policy Alternatives.

“Just as concerning as the trade imbalance, is the make-up of our trade with Korea.”

He said Canada sells mostly unprocessed, low value-added, carbon-intensive resources to Korea such as coal, copper and aluminum while importing mostly high-tech, manufactured goods such as autos, electronics and appliances.

“The sudden breakthrough in the talks appears to be driven more by political rather than trade policy factors,” said Sinclair.

Stuart Trew, a trade expert with the Council of Canadians, said he expects any deal will only widen Canada’s trade deficit with Korea.

“If things go the same way as they did for the U.S. in the U.S.-Korea FTA, Canada can expect zero export growth and an increased trade deficit,” said Trew.

“Considering how similar U.S. and Canadian exports are, I think it’s the most likely situation.”